Small- to medium-sized businesses make great credit union members. They’re a big part of the local economy, they borrow even when individuals don’t, and their loyalty is almost unmatched.
Yet most credit unions don’t cater to SMBs. That’s a big missed opportunity.
Read on to learn more about small business accounts, lending, and how Crux Analytics is helping credit unions serve these underserved members.
Credit Union Small Business Lending Opportunities
The numbers tell a compelling story. 99.9% of businesses in the U.S. are small businesses. They employ nearly half of the population. And by some estimates, around 11 million SMBs are currently credit union members.
Yet despite those numbers, SMBs often turn to non-traditional lenders and receive terrible terms. As you probably know, your credit union would do much better by SMB borrowers.
Additionally, SMBs provide lending opportunities when others dry up. So, even when auto loans and mortgages are down, SMBs will always need access to financing.
Why Court Small Businesses?
The statistics above, as well as several others omitted here, clearly demonstrate the opportunity that small businesses offer for credit unions.
More importantly, small businesses are the lifeblood of a community. They are the restaurants and coffee shops you love. They are the local theaters that draw crowds. They are the auto shops that repair your sensible Volvo.
Small businesses have a big community impact.
They also make excellent credit union members. Their engagement is high, thanks in no small part to their product mix. Typically, their loyalty runs deep. And, with the right tools in place, they can do a heck of a job bringing in new members with things like point-of-sale financing.
Industry research has shown that SMB lending drives deposits. SMBs with lending relationships have deposit balances 2.3x greater than those with no lending relationship, and 3x greater than the average consumer.
Credit unions and small businesses share community goals. Small business lending is a relatively new practice for many credit unions, and there should be a more concerted effort on both sides to work together. If only there was an easier way to find that connection.
Introducing Crux Analytics
Crux is an analytics platform that allows credit unions to more accurately and efficiently source and assess small business loans. If that’s a little unclear, let’s break it down (and explore a couple of key use cases).
First, let’s clear up what Crux isn’t. Crux isn’t an automated decisioning engine. Crux isn’t a black box. Crux isn’t alternative credit scoring.
Instead, Crux is on a mission to build communities by empowering small business lenders. How they do it is really cool, and we’re going to have to leave some things out in the interest of keeping this short:
- Crux is built for underwriters. Crux uses hyper-local, business-specific data to provide extremely relevant information. It allows underwriters to make decisions in hours, not days.
- Crux is built for loan officers. Crux gives loan officers a highly targeted pipeline of vetted small business prospects. It can draw from your existing member base or from within your field of membership It allows you to filter for different criteria and learns your credit union’s preferences, making prospecting easier and easier all the time.
Usually, we at CU 2.0 love automation. But when it comes to credit union small business lending, full automation doesn’t provide the necessary transparency to make adequately risk-controlled decisions. We think Crux has the better approach.
Small businesses have different needs and risk profiles than the average borrower. Their industry, the amount they need, their location (down to the block) can mean big changes in a lending decision.
Crux allows humans to do their jobs better, faster, and with better accuracy. And it ensures that the humans who build a community still participate in the decisions that affect it.
You can learn more about Crux and what they’re doing here:
Additional Resources
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